The ActiveFilings' Blog

Archive for March, 2009

There are many different ways to start a business, but most people chose to start their businesses as a sole proprietor. For a lot of people, setting their business up as a sole proprietor seems easier. However, it may not be the right decision. How do you decide? As a business owner you can choose to incorporate your business, but what are the benefits?

1. Better tax breaks. Incorporating a business will save you money during tax time. Being a corporation eliminates the need to pay self employment tax, but corporations are also taxed lower than individuals. You can also enjoy more tax deductions than someone who is self employed. This holds true even if you are the only shareholder and employee of the company you can enjoy greater tax deductions. For example, medical insurance premiums are 100 percent tax deductible to businesses that are incorporated.

2. You have a corporate identity. Incorporating a business, gives you an image of stability and credibility. This means people are more likely to choose your business over someone who is doing business as an individually. Customers would rather be safe than sorry.

3. Incorporating a business, also takes away your personal liability. It makes the business it’s own identity. The business liabilities remain with the business and are completely separate from you personally. This means if for whatever reason, someone sues the corporation, your personal assets are protected.

4. When you incorporate a business, it gives your business a continuous life. This means the business can out live the owner as long as it complies with federal and state regulations and, of course the proper paper work is filed.

There is a lot to consider when incorporating a business, but there are also a lot of benefits. Incorporating is an easier process than you think, holding off could cost you a lot of money!